UK house price inflation rose to a four-year high in September driven by pent-up demand and stamp duty holiday, data from the Nationwide Building Society showed Wednesday.
House prices grew 5 percent year-on-year in September, which was the highest since September 2016. Inflation was forecast to rise moderately to 4.5 percent from 3.7 percent.
Month-on-month, house price inflation slowed to 0.9 percent from 2 percent in August.
The rebound reflects a number of factors, Robert Gardner, Nationwide’s chief economist, said.
Pent-up demand is coming through, with decisions taken to move before the coronavirus lockdown now progressing the economist observed. The stamp duty holiday is adding to momentum by bringing purchases forward.
Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown, Gardner said.
Most forecasters expect labor market conditions to weaken significantly in the quarters ahead as tighter restrictions dampen economic activity and the furlough scheme winds down.
While the recently announced jobs support scheme will provide some assistance, it is not as comprehensive as the furlough scheme it replaces, Nationwide observed.
In the third quarter, house prices gained 1.7 percent sequentially, taking the annual growth to 3.5 percent. Annual house price growth in London continued to edge higher, with prices up 4.4 percent.
Data released by the Bank of England on Tuesday showed that mortgage approvals increased to the highest level in nearly 13 years in August. Approvals increased sharply to 84,700 from 66,300 in July.
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